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                                                                  EXHIBIT 10.167


                                 FORBEARANCE AND
                             MODIFICATION AGREEMENT


                  THIS FORBEARANCE AND MODIFICATON AGREEMENT (this "Agreement")
is entered into as of the 7th day of May, 1999 by and between Preferred Equities
Corporation, a Nevada corporation ("Borrower") and Heller Financial, Inc., a
Delaware corporation (the "Lender").


                                 R E C I T A L S


                  A. The Borrower and Lender are parties to that certain
Acquisition and Renovation Loan Agreement (the "Colorado Acquisition Loan") made
in connection with a Routt County, Colorado timeshare resort (the "Colorado
Resort") and that certain Interval Receivables Loan and Security Agreement (the
"Colorado Receivables Loan") made in connection with the Colorado Resort, both
dated as of August 6, 1996 (together, as each have been or may be amended from
time to time, the "Colorado Loan Agreements");

                  B. The Borrower and Lender are also parties to that certain
Acquisition and Renovation Loan Agreement dated March 29, 1996 (the "Florida
Acquisition Loan") made in connection with a Tango Bay, Florida timeshare resort
(the "Florida Resort") and that certain Interval Receivables Loan and Security
Agreement dated March 28, 1996 (the "Florida Receivables Loan") made in
connection with the Florida Resort (together, as each have been or may be
amended from time to time, the "Florida Loan Agreements"). The Florida Loan
Agreements and the Colorado Loan Agreements are referred to herein as the "Loan
Agreements";

                  C. Borrower failed to make payments due for the months of
September, 1998, December, 1998 and March, 1999 under Section 4.1 of the
Colorado Acquisition Loan and Section 4.1 of the Florida Acquisition Loan. Such
failure to comply with said provisions would constitute,absent the agreement to
forbear set forth in this Agreement, an Event of Default under those agreements
and Events of Default under the Florida Receivables Loan and Colorado
Receivables Loan, thus entitling Lender to exercise its rights and remedies as
provided in the Loan Agreements and all documents and agreements executed in
connection with the foregoing (collectively, the "Loan Documents");

                  D. Borrower has requested Lender to forbear from declaring
Events of Default as set forth above and enforcing its rights and remedies under
the Loan Documents until July 31, 1999 for the purpose of affording the Borrower
an opportunity to formulate a comprehensive proposal for the restructuring of
Borrower's Obligations under the Loan Agreements; and

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                  E. Lender is willing to forbear from declaring such Events of
Default and from enforcing its rights and remedies that would arise therefrom
for a limited period of time, provided that Borrower performs and meets the
conditions of the forbearance set forth herein.

                  NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged the parties hereto
agree as follows:


                  SECTION 1.  Definitions.

                           1.1 Capitalized terms used and not otherwise defined
                  herein are used with the meanings set forth in the Loan
                  Agreements.

                           1.2 The following terms used in this Agreement shall
                  have the meaning set forth below:

                           1.2.2 "Creditor Action" shall have the meaning set
                  forth in Section 6 hereof.

                           1.2.3 "Existing Defaults" shall mean the potential
                  Events of Default set forth in Recital C hereof.

                           1.2.4 "Forbearance Default" shall mean (a) the
                  occurrence of any Default or Event of Default under the Loan
                  Documents other than the Existing Defaults, (b) the failure of
                  the Borrower to comply with any term, condition, or covenant
                  set forth in this Agreement within the time frame set forth,
                  (c) if any representation made by Borrower under or in
                  connection with this Agreement shall prove to be materially
                  false as of the date when made, (d) a material adverse change
                  in the financial condition of Borrower, (e) the occurrence of
                  a Creditor Action, or (f) the filing of any petition
                  (voluntary or involuntary) under the insolvency or bankruptcy
                  laws of the United States or any state.

                           1.2.5 "Termination Date" shall mean the earlier to
                  occur of (a) 5:00 p.m. Chicago Time on July 31, 1999, (b)
                  immediately upon the occurrence of a Creditor Action, or (c)
                  the date and time, which is twenty-four (24) hours subsequent
                  to the receipt by Borrower of a notice from Lender that a
                  Forbearance Default (other than a Creditor Action) has
                  occurred.


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                  SECTION 2.        Agreement to Forbear.

                           2.1 The Recitals set forth above are fully
                  incorporated herein by this reference. Provided that no
                  Forbearance Default occurs, the Lender hereby agrees to
                  refrain through the Termination Date from exercising any of
                  its rights under the Loan Agreements, or any of the Loan
                  Documents that may exist by virtue of the Existing Defaults.

                           2.2 Nothing in this Agreement shall be construed to
                  be a waiver of or acquiescence in any Existing Default, and
                  all such Existing Defaults shall continue in existence,
                  subject only to the Lender's agreement, as set forth herein,
                  not to enforce its remedies for a limited period of time.
                  Except as expressly set forth in Section 4 below, the
                  execution and delivery of this Forbearance Agreement shall not
                  (i) constitute an extension, modification, or waiver of any
                  aspect of the Loan Agreements or the Loan Documents; (ii)
                  extend the terms of the Loan Agreements or the due date of any
                  of Borrower's Obligations; (iii) give rise to any obligation
                  on the part of Lender to extend, modify, or waive any aspect
                  of the Loan Agreements or Loan Documents; or (iv) give rise to
                  any defenses or counterclaims to Lender's right to compel
                  payment of Borrower's Obligations, or otherwise enforce the
                  Loan Agreements and the Loan Documents. Except as expressly
                  limited herein, Lender hereby expressly reserves all of its
                  rights and remedies under the Loan Documents and under
                  applicable law with respect to such Existing Defaults,
                  including, without limitation, the Lender's right to charge
                  interest on Borrower's Obligations at the Default Rate. From
                  and after the Termination Date, the Lender shall be entitled
                  to enforce the Loan Documents according to the original terms
                  of the Loan Documents.

                  SECTION 3.  Representations and Warranties.

                           In consideration of the Lender's promise to forbear
                  herein contained, the Borrower hereby represents and warrants
                  to the Lender as of the date hereof:

                           3.1 In connection with the execution of this
                  Agreement, Borrower has made full disclosure to Lender of all
                  material aspects of its financial condition and business
                  operations.


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                           3.2 The execution, delivery and performance by the
                  Borrower of this Agreement is within its corporate power and
                  has been duly authorized by all necessary corporate action,
                  and this Agreement constitutes a valid and binding agreement
                  of Borrower, subject only to the effect of any applicable
                  bankruptcy, insolvency, reorganization, or other similar laws
                  or equitable principles relating to or affecting the
                  enforcement of creditors' rights generally.

                           3.3 All Loan Documents, including without limitation
                  the Loan Agreements and the Exclusive Financing Agreement
                  dated August 6, 1996 with respect to the Colorado Resort and
                  the Exclusive Financing Agreement dated March 29, 1996 with
                  respect to the Florida Resort, constitute valid and binding
                  legal obligations of Borrower and are enforceable against
                  Borrower and the assets thereof in accordance with the terms
                  thereof. This Agreement shall not be deemed or be construed to
                  be a satisfaction, reinstatement, novation, or release of the
                  Loan Agreements or of any of the other Loan Documents, or a
                  waiver by Lender of any of the rights of Lender under the Loan
                  Agreements or any of the other Loan Documents, or any of them,
                  or at law or in equity. Borrower has no defenses, setoffs,
                  claims, counterclaims or causes of action of any kind or
                  nature whatever with respect to the Loan Documents or the
                  obligations thereunder to Lender, or with respect to any other
                  documents or instruments now or heretofore evidencing,
                  securing, or in any other way relating to the Obligations or
                  the Loan Documents, or with respect to the administration or
                  funding of any of Borrowers Obligations to Lender.

                  SECTION 4.  Other Agreements.

                           In consideration of the Lender's promise to forbear
                  herein contained, the Borrower hereby covenants and agrees
                  with the Lender the following:

                           4.1 Borrower shall provide full and complete access
                  to Lender in order that Lender may conduct audits, as
                  necessary in Lender's sole discretion, of Borrower's books and
                  records with regard to cash flow and projections;

                           4.2 The definition of "Revolving Period" set forth in
                  the Appendix to the Colorado Receivables Loan is hereby
                  amended to state as follows:


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                               "The period commencing on the date of the first
                               Advance and ending on July 31, 1999."

                           4.3 The definition of "Revolving Period" set forth in
                  the Appendix to the Florida Receivables Loan is hereby amended
                  to state as follows:

                               "The period commencing on the date of the first
                               Advance and ending on July 31, 1999."

                           4.4 Section 1.5(a) Voluntary Prepayments of the
                  Colorado Receivables Loan is amended by replacing the second
                  sentence of that Section, which states "Notwithstanding the
                  foregoing, in the event of a prepayment of the Loan in whole
                  or in part, upon a bulk sale by Borrower of Financed Notes
                  Receivable, no Prepayment Premium shall be payable and
                  Borrower shall, in lieu thereof, pay to Lender an exit fee of
                  one percent (1%) of the amount of prepayment," with the
                  following sentence:

                           "Notwithstanding the foregoing, in the event of a
                           prepayment of the Loan in whole or in part, upon a
                           bulk sale by Borrower of Financed Notes Receivable,
                           no Prepayment Premium shall be payable and Borrower
                           shall, in lieu thereof, pay to Lender an exit fee of
                           one percent (1%) of the amount of prepayment;
                           provided, however, that the purchase price for any
                           such bulk sale(s) are individually no more than 30%
                           of the outstanding Receivables Loan balance and, in
                           the aggregate for any twelve month period, does not
                           result in a reduction of the Receivables Loan balance
                           of greater than 50%, as calculated from the time of
                           the first bulk sale within the said 12 month period."


                       4.5 Section 1.5(a) Voluntary Prepayments of the Florida
                  Receivables Loan is amended by replacing the second sentence
                  of that Section, which states "Notwithstanding the foregoing,
                  in the event of a prepayment of the Loan in whole or in part,
                  upon a bulk sale by Borrower of Financed Notes Receivable, no
                  Prepayment Premium shall be payable and Borrower shall, in
                  lieu thereof, pay to Lender an exit fee of one percent (1%) of
                  the amount of prepayment," with the following sentence:


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                           "Notwithstanding the foregoing, in the event of a
                           prepayment of the Loan in whole or in part, upon a
                           bulk sale by Borrower of Financed Notes Receivable,
                           no Prepayment Premium shall be payable and Borrower
                           shall, in lieu thereof, pay to Lender an exit fee of
                           one percent (1%) of the amount of prepayment;
                           provided, however, that the purchase price for any
                           such bulk sale(s) are, individually no more than 30%
                           of the outstanding Receivables Loan balance and, in
                           the aggregate for any twelve month period, does not
                           result in a reduction of the Receivables Loan balance
                           of greater than 50%, as calculated from the time of
                           the first bulk sale within the said 12 month period."

                           4.6 Borrower shall remit to Lender all payments, fees
                  or other sums received as prepayments or upon modification to
                  Financed Notes Receivable under the Colorado Receivables
                  Agreement or the Florida Receivables Agreement;

                           4.7 Borrower shall complete all steps necessary for
                  sales registration of the Colorado Resort for the states of
                  Nevada and Texas prior to the Termination Date.

                           4.8 Borrower shall throughout the term of this
                  Agreement continue to make a full and complete disclosure of
                  all material aspects of its financial condition and business
                  operations and continue to comply with the Loan Documents in
                  all respects excepts as expressly set forth herein.

                           4.9 Borrower shall cure all Existing Defaults prior
                  to the Termination Date. If any Existing Defaults remain
                  uncured as of the day after the Termination Date, then such
                  Existing Defaults shall immediately and without any notice or
                  demand, become Events of Default under the Loan Documents,
                  entitling Lender to take all rights and remedies available
                  under the Loan Documents or applicable law.




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                  SECTION 5.        Release.

                           In further consideration of the execution of this
                  Agreement by Lender, the Borrower and each Guarantor hereby
                  releases Lender and its affiliates, officers, employees,
                  directors, agents and attorneys (collectively the "Releasees")
                  from any and all claims, disputes, causes of action, and
                  liabilities that Borrower or any Guarantor may have against
                  any of the Releasees which arise from or relate to any action
                  or inactions which any of the Releasees have taken prior to
                  the date hereof with respect to the Loan Agreements and the
                  other Loan Documents.

                  SECTION 6.        Creditor Action.

                           Lender's obligation to forbear hereunder are
                  conditioned upon all other creditors of Borrower (including
                  but not limited to trade creditors and subordinated creditors)
                  refraining from taking any action whatsoever (including
                  acceleration of indebtedness) during the term of this
                  Agreement. In the event that any such creditor takes such
                  action (including acceleration of indebtedness) (a "Creditor
                  Action") all of Lender's obligations hereunder shall terminate
                  without notice.

                  SECTION 7.   Miscellaneous.

                  7.1      Section Headings.

                           Section headings in this Agreement are included
                  herein for convenience of reference only and shall not
                  constitute a part of this Agreement for any other purpose.

                  7.2      Applicable Law.

                           This Agreement and the rights and obligations of the
                  parties hereto and all other aspects hereof shall be deemed to
                  be made under, shall be governed by, and shall be construed
                  and enforced in accordance, the internal laws (as opposed to
                  the conflict of laws provision) and decisions of the State of
                  Illinois.



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                  7.3      Counterparts.

                           This Agreement may be executed in any number of
                  counterparts, and by different parties hereto and separate
                  counterparts, each of which when so executed and delivered
                  shall be deemed an original, but all such counterparts
                  together shall constitute but one in the same instrument.

                  7.4      Continued Effectiveness.

                           Notwithstanding anything contained herein, the terms
                  of this Agreement are not intended to and do not serve to
                  affect a novation as to the Loan Agreements or any of the
                  other Loan Documents. The parties hereto expressly do not
                  intend to extinguish the Loan Agreements or any of the Loan
                  Documents. Instead it is the expressed intention of the
                  parties hereto to reaffirm the Indebtedness created under the
                  Loan Agreements and Loan Documents.

                  7.5      Notices.

                           Any Notice to any party hereto shall be given in the
                  manner and to the party at the address of such party in
                  accordance with the provisions of Subsection 6.1 of the Loan
                  Agreements.



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         IN WITNESS WHEREOF, the parties hereto have caused this Forbearance
Agreement to be executed as of the date set forth above, by the respective
officers thereunto duly authorized.


                         PREFERRED EQUITIES CORPORATION,
a Nevada corporation


                         By:    /s/ [SIGNATURE]
                                ---------------------------
                         Title: Vice President
                                ---------------------------




                         HELLER FINANCIAL, INC.,
                         a Delaware corporation


                         By:
                                ---------------------------
                         Title:
                                ---------------------------

                                            GUARANTOR:

                                            MEGO FINANCIAL CORP.,
                                            a New York corporation

                         By:    /s/ [SIGNATURE]
                                ---------------------------
                         Title: Vice President
                                ---------------------------




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